U.S Can Learn From Japan's Health Care

A few weeks ago, Chip wrote a blog and alluded to an article he heard about in one of both of our favorite newspapers, The Virginian-Pilot. The article was actually an opinion piece written by Noah Smith and it was published in The Virginian-Pilot's Op-Ed section on September 21st. I agree with Chip....

...in the idea that maybe the Japanese have found a solution that would be worth our U.S. experts spending some time studying.

Perhaps the Japanese have had to dig deeper to find a better healthcare system due to the deep recession their economy has been in for a long time. Maybe their historical need to be smart and economical has made the population there more focused on being healthy and being wise about how their health care dollars are spent.

So, rather than speculate, I thought it wise to reprint a portion of Noah Smith's editorial piece and let you the loyal reader form your own opinion. (In case you're wondering, I think Mr. Smith is on to something important here).

The following is a partial reprint of part of an editorial piece written by Noah Smith and published in the "Other Views" section of The Virginian-Pilot on Thursday, September 21, 2017:

"Thus, it falls to us pundits to think about what the eventual compromise plan should look like. This is a devilishly difficult task, because health care is such a complicated, multifaceted issue. But one fruitful approach is to look at other countries and find a system that seems to work well and think about how to copy it.

So how about Japan? The country's health care system is one of the cheapest on the planet. It costs less as a percentage of the economy than almost any of its rich-world peers.

Japan achieves this low level of spending even though it has one of the oldest populations in the world. Despite having to take care of farm more old people, and having a very high standard of medical treatment, Japan spends very little on health care. And few would dispute that the system gets results-people live longer in Japan than anywhere else.

Japan has a hybrid system. the government pays 70 percent of the cost of all health procedures unless you're a low-income elderly resident, in which case it pays as much as 90 percent. The remaining 30 percent is covered by private health insurance-either employer-sponsored or privately purchased-which citizens are required to have. the private insurance co-pays to cover the 30 percent are partially tax-deductible. Benefits are the same for everyone and included dental and mental-health care. For catastrophic care, poor people and people with disabilities or certain chronic conditions, the government pays more.

This is not different from Medicare. It has deductibles (unlike Japan) and fixed co-pays, for which many patients purchase supplemental "Medigap" insurance. Simply extending this policy to cover all Americans would leave the United States with a system not too different from Japan's. The private insurance industry would continue and would supplement the government."

Mr. Smith goes on to theorize that the government's bargaining power could enable it to purchase from the private sector market better insurance benefits at lower prices. And the private sector could compete on enhancing benefits and on rewarding people and providers for enabling better health care costs and quality results.

Again, this is not easy stuff. But the author's premise is hard to argue against and one that certainly seems worth exploring. Back in the late 70's and early 80's the Japanese manufacturing industry (cars, steel, computers, electronics etc.) was "winning' against the U.S. manufacturing sector. Only when domestic manufacturers began to explore the power of Demming's total quality management movement did we see American ingenuity and cost effective, better quality emerge as a way to regain dominance in those huge industry segments.